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UK Government agrees Brexit plan

In an attempt to end the impasse in Brexit negotiations, in particular, in relation to future customs arrangements, the UK Government has published a statement setting out its proposals for a future EU-UK relationship – at the centre of which would be a free trade area for goods.

Future customs arrangements

On customs arrangements, in the UK’s earlier position paper published in August 2017, it had proposed two options: a “highly streamlined customs arrangement between the UK and the EU”, which aimed to use technology based solutions to simplify customs procedures; (the so-called ‘max-fac’ option); or a “new customs partnership with the EU. This would have involved “the UK mirroring the EU’s requirement for imports from the rest of the world where their final destination was the EU".

The proposed third option set out in the recent UK government statement, is described as a ‘facilitated customs arrangement’

Under this proposal, the UK would apply its own tariffs for goods intended for the UK, and the EU’s tariffs for goods intended for the EU – although little detail is given at this stage about the technology and processes that would be needed to achieve this. Indeed, the Statement acknowledges that the plan would only become operational in stages as both sides complete the necessary preparations. The system would need to ensure “that businesses paid the right or no tariff - in the vast majority of cases upfront, and otherwise through a repayment mechanism”. The Government maintains that the plan would enable the UK to control its own tariffs for trade with the rest of the world and would remove the need for customs checks and controls between the UK and the EU ‘as if a combined customs territory’.

Trade

Turning to trade, the Government’s statement proposes the establishment of a free trade area in respect of goods. Specifically, the “UK and the EU would maintain a common rulebook for all goods including agri-food, with the UK making an upfront choice to commit by treaty to ongoing harmonisation with EU rules on goods, covering only those necessary to provide for frictionless trade at the border”.

In contrast, on services, the UK is seeking a different arrangement, recognising the UK and the EU will not have current levels of access to each other’s markets. This is said to be on the basis that it is in the UK’s interests to have greater regulatory flexibility.

The statement proposes that a fair trading environment could be achieved by incorporating “strong reciprocal commitments” into the legal agreements that define the future relationship. Moreover, the UK “would commit to apply a common rulebook on state aid, and establish cooperative arrangements between regulators on competition”. Further, it is proposed that standards would not fall below existing levels in relation to the environment, climate change, social, and employment and consumer protection. Parliament would have the ultimate say on whether or not elements of the “common rule book” would be implemented within UK law, however rejection would have consequences for market access, security cooperation and a frictionless border.

Finally, the statement calls for the establishment of “a joint institutional framework” to provide for the consistent interpretation and application of UK-EU agreements by both parties. This would be done in the UK by UK courts, and in the EU by EU courts, albeit that the UK courts would pay “due regard” to CJEU case law in areas where the UK continued to apply a common rulebook. According to the Government’s statement, this framework would also provide for the resolution of disputes, including through a Joint Committee and, in many areas, through binding independent arbitration. It would accommodate a role for the CJEU as the interpreter of EU rules, but subject to the principle that the courts of one party cannot resolve disputes between the two.

As with many aspects of the Government’s proposal, how this would work in practice will only become clear when greater detail is provided. The Government has promised a White Paper, which is intended to provide more detail on the proposals outlined above. We will provide further analysis once that is published.

The EU’s chief Brexit negotiator, Michel Barnier, has commented that he looks forward to reviewing the White Paper when published. Negotiations on it and the Withdrawal Agreement will recommence during week beginning 16 July 2018.

Brexit: planning for the future as negotiations continue

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